Philippine Airlines continues to pursue talks to form a new Cambodian flag carrier with local telecommunications, banking and property tycoon Kith Meng despite missing a deadline to close the deal for a second time this week, its top executive said.

PAL president Ramon S. Ang said parties were keen on closing the deal, explaining that delays were caused by recent elections in Cambodia that saw long-serving prime minister Hun Sen reelected for another five years late last month.

PAL and Meng’s Royal Group were supposed to finalize the transaction on Oct. 15, which was already extended from the original July 15 closing date.

“We are nearly signing,” Ang said in a text message yesterday. “[Cambodia] just had national elections.”

The plan to form a new carrier, which will be called Cambodia Airlines, opens up opportunities for PAL in one of the region’s fastest growing economies. PAL, which continues to struggle financially, said the transaction was also expected to eventually translate to higher revenues.

The board of PAL in April agreed to pursue the acquisition of a 49 percent stake in Inter Logistics (Cambodia) Co. Ltd., which owns 100 percent of Cambodia Airlines.

The transaction was valued at $10 million and called for a 10 percent down payment due before closing, a previous filing showed. The balance will be paid upon demand by the board of directors of Cambodia Airlines.

If successful, the new airline would compete with Cambodia Angkor Air, which is controlled by the Cambodian government in partnership with Vietnam Airlines, as well as other regional carriers.

Aviation analyst earlier questioned the small start-up costs for Cambodia Airlines but Ang said PAL, which has an ongoing $9.5 billion re-fleeting strategy involving 64 mid-range and long-range Airbus planes, was prepared to deploy as many as 22 aircraft to support Cambodia Airlines.

As part of the closing conditions, Cambodian Airlines will be entitled to traffic rights and slots under bilateral agreements between Cambodia and other countries, the same filing showed.

Furthermore, Philippine Airlines said the transaction was meant to establish a national carrier for Cambodia and contribute to that country’s economic growth.

The planned acquisition comes as Philippine Airlines itself may undergo a change in ownership. Its controlling shareholder, tycoon Lucio Tan, who owns a 51 percent stake in parent firm PAL Holdings, has expressed his intention to unload his entire stake.

The rest of PAL Holdings not held by public shareholders is owned by conglomerate San Miguel Corp.

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